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In a decision delivered on February 4, 2010, the Federal Court of Australia (see Wikipedia entry here) ruled that Australian Internet Service Provider (ISP) iiNet could not be held liable for unauthorized downloads of copyrighted movies by its customers (Roadshow Films Pty Ltd v iiNet Limited (No. 3)). The applicants were a coalition of thirty-four Australian and U.S. motion picture production companies, assisted in the conduct of their claim by the Australian Federation Against Copyright Theft (AFACT). The trial began in October 2009 and drew interest from many in Australia and abroad. One source described the case as possibly “one of the most important dates in Australian ICT [information and communication technology] and copyright history.” The judge noted that the case before him was, to his knowledge, the first suit in the world against an ISP for breach of copyright by its customers to proceed to trial.

Authorizing infringement

In a nearly two hundred-page judgment, Justice Dennis Cowdroy found that the applicant companies had succeeded in proving that users of iiNet’s services had “made available online,” “electronically transmitted,” and “copied” certain films. However, the applicants had failed to show that iiNet had “authorized” those infringements. The case centered around the use by iiNet’s customers of the peer-to-peer BitTorrent protocol to share movie files, in breach of the studios’ copyrights. The critical issue in the case was whether iiNet, by failing to take any steps to stop infringing conduct, authorized the copyright infringement by its users. Under Australian copyright law, authorizing the infringement of copyright by another is itself treated as an infringement.

Three step reasoning

There were three main steps to Justice Cowdroy’s reasoning:

He found that, though iiNet had knowledge of the infringements and did not act to stop them, this did not lead to a finding of authorization. Under the Australian law of authorization, there is a distinction between providing the “means” of infringement, and providing a “precondition” for infringement. Justice Cowdroy distinguished the present facts from earlier cases, including a 2005 Federal Court ruling in a case brought against the licensors of the Kazaa file-sharing software. In the Kazaa case, the software provided the “means” for infringement, whereas in the case of internet services, there did “not appear to be any way to infringe the applicants’ copyright from the mere use of the internet.” Here, the means of infringements at issue was the BitTorrent system, which iiNet had no control over.

AFACT had pushed for iiNet to implement a system of notification, suspension, and termination of infringing customers, but the judge found that this would not have been a “reasonable step” for the purposes of Section 101(1A)(a) of the Copyright Act 1968. This section provides that, in determining whether a person has authorized infringement, a court must consider, among other things, (a) the extent of the person’s power to prevent the infringement; (b) the nature of any relationship existing between that person and the infringer; and (c) whether the person took “any other resonable to steps to prevent or avoid” the infringement. The judge noted that “[t]he applicants appear to premise their submissions on a somewhat binary view of the world whereby failure to do all that is requested and possible to co-operate with copyright owners to stop infringement occurring, constitutes approval of copyright infringement. Such view is not the law. It is possible to be neutral. It is possible to prefer one’s own interests to those of the copyright owners.” (para. 504). iiNet could therefore not be held to be authorizing the infringements on the basis that they had failed to adopt a system such as the one urged by the applicants.

iiNet could not be seen as sanctioning, approving or countenancing copyright infringement, as it had done no more than to provide an internet service to its customers. In the Kazaa case the respondents intended copyright infringements to occur, and the software was deliberately structured to achieve this result. By contrast, in this case there was no evidence that iiNet “favored” infringement in its provision of access to the internet.

A disappointing ruling

The judge noted that the applicants would be disappointed by the ruling, as it was clear that infringement of their copyrights was occuring on a large scale, worldwide (para. 19). Yet this fact did not compel him to find authorization of infringement merely because “something must be done.” Australian law recognizes no positive obligation to protect the copyright of others, and the judge found that iiNet provides a legitimate communication service which is neither intended nor designed to infringe copyright (para.20). Justice Cowdroy is also reported to have remarked that “[i]f the ISPs become responsible for the acts of their customers, essentially they become this giant and very cheap mechanism for anyone with any sort of legal claim.”

The battle may not be over, however, as reports from before the ruling was issued suggest that AFACT may appeal the decision to the High Court of Australia, which could take another two years.

ISP liability in the United States

In the United States, secondary liability for copyright is dealt with as a matter of vicarious or contributory infringement, rather than “authorization” (though the concepts involved are similar). However, ISPs are protected from copyright infringement claims by Section 512(a) of the Copyright Act, which provides that service providers will not be liable for “infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for, material through a system or network controller or operated by or for the service provider.” This section provides strong protection for ISPs, and likely explains why a case such as the one brought against iiNet in Australia has not been brought against a U.S. ISP.